Luxury Market Report: Discretionary Spending Insights

As the luxury sector navigates economic uncertainties, brands must harness data-driven insights and human-centric strategies to not only survive but thrive. This report unveils key trends shaping discretionary spending and outlines practical steps for forward-thinking executives.

From stable global spending forecasts to shifting consumer values, the landscape is evolving. Brands that embrace agility, authenticity, and immersive experiences will emerge stronger in 2026 and beyond.

Global Market Outlook and Growth Projections

After a period of stagnation, the luxury market is set for renewed momentum. Analysts project flat year-over-year spending around €1.44 trillion in 2025, followed by a rebound in 2026. Personal luxury goods, valued at US$473.9 billion in 2024, are expected to reach US$577.8 billion by 2029 at a 4.0% compound annual growth rate. Meanwhile, the broader luxury goods market is on track to hit USD 579.26 billion by 2030, growing at a 6.8% CAGR from 2025 to 2030.

These projections reveal a resilient sector poised for transformation. Key drivers include the resurgence of Chinese and American spending, the rise of millennials and Gen Z, and the acceleration of online channels.

Consumer Behavior and Discretionary Spending Shifts

Traditional patterns of conspicuous consumption are giving way to experiential indulgence and meaningful connections. High-end hotels and luxury services are outpacing retail, as consumers prioritize memories over material goods. In 2024, 13% of U.S. luxury spending occurred abroad, signaling renewed confidence in travel.

Resale platforms are also reshaping purchasing habits. A September 2025 survey found that 60% of U.S. and European consumers used second-hand channels, reflecting both budget consciousness and sustainability concerns.

At the same time, polarization by price tier persists: the top end of the market faces a slight contraction, while the accessible luxury segment remains relatively stable. For brands, this calls for refined pricing strategies and targeted offerings.

Regional Dynamics and Opportunities

• United States: The emerging epicenter of luxury growth, driven by resilient high-income consumers and wealth effects from equities and crypto markets.
• China: Sales broadly flat in 2026 as consumer tastes evolve and domestic competition intensifies.
• Europe: Tourist spending lags due to currency headwinds, underscoring the need for localized engagement.
• Emerging Markets: High potential in Japan (19.0%), Middle East (17.9%), and India (11.9%) fueled by rising tourism and retail investments.

Brands should adopt a balanced regional strategy—doubling down on U.S. flagship events while tailoring offerings for evolving Asian markets and revitalizing European tourism partnerships.

Category Performance and Strategic Implications

Luxury categories exhibit varied momentum. Travel and hospitality top the list for growth potential, with 36.2% of executives identifying it as a priority. Personal luxury goods continue to generate healthy margins, with economic profit tripling between 2019 and 2024.

This data underscores the need for category-specific innovation and marketing. Eyewear brands can capitalize on premium collaborations, while fashion houses should deepen digital customization efforts.

Overcoming Challenges and Embracing AI

Brands face macro headwinds—from inflation and tariffs to cautious consumer sentiment. Margins are under pressure, demanding operational discipline and efficiency. Executives cite AI-driven processes as a top opportunity for cost optimization without diluting brand allure.

Practical steps include:

• Deploying AI for demand forecasting and inventory optimization.
• Enhancing clienteling tools with predictive insights, driving loyalty.
• Integrating immersive technologies—AR, VR—within flagship stores.

Actionable Framework for Brand Leaders

To translate insights into impact, luxury executives should focus on five pillars:

• Performance Discipline: Implement rigorous budgeting and scenario planning.
• Pricing Power: Refine tiered pricing models aligned to local market elasticity.
• Desirability and Storytelling: Craft narratives that resonate with Gen Z and millennials’ values.
• Immersive Experiences: Blend physical and digital touchpoints to create memorable journeys.
• Loyalty and Clienteling: Leverage data to deliver personalized engagement at scale.

By embedding this framework, brands can navigate uncertainty, deepen customer connections, and unlock sustainable growth.

Looking Ahead

As we approach 2026, the luxury landscape will be defined by agility and human-centric innovation. Brands that balance data-driven rigor with emotional storytelling will capture market share and engender lasting loyalty.

Embrace this moment of transformation: invest in AI efficiencies, champion authentic experiences, and build meaningful relationships with the next generation of luxury consumers.

Together, these strategies will propel your brand from resilience to leadership in the dynamic world of luxury.